Got my coins….

I ordered my second shipment of coins on Sunday, and they already arrived today. The whole bank process took less than five minutes, and I am 3,000 Starwood points richer. I wouldn’t usually do this, but I’m hoping to achieve the minimum spend on the Starwood American Express for the 15,000 bonus points (which I’m not technically entitled to, but that’s a different story). For those that have no clue what I’m talking about, check out this FlyerTalk thread.

It’s a somewhat valid ‘marketing’ expense to eat shipping and transaction fees. There is some value in Uncle Sam trying to get the coins circulated and getting people comfortable with using them, as the $1 coins are cheaper to “maintain” than $1 paper bills in the long term. Unfortunately, it doesn’t seem to be working.

I doubt that the Gov’t is paying 5% transaction fees for US Mint purchases.

1. Who’s paying for the cash for clunkers program? I bought a new car a couple of months ago, and I don’t have a clunker. Not fair!

2. I see where you’re coming from, but there are some serious benefits to others from this as well. UPS has more business, the credit cards are making a bit in fees, in turn the airlines (which will have to be bailed out if it weren’t for this coin game) are making money off of the miles, and most importantly the UPS guys are getting good exercise, preventing obesity. Sounds like a win-win-win-win-win to me!

Here’s how it works in other countries: the government decides to replace a low denomination note with a coin (because it *is* cheaper for the government, that is the people, in the long run). People grumble (because they don’t like changes). For a short while the coins and the notes are in circulation together. People, especially the elderly, make every effort to have the notes (because that’s what they’re used to). They ask cashiers to give them notes instead of coins as change. Gradually, the government absorbs the notes. In some countries they’re even canceled after a while, usually when there aren’t many left in circulation anyway. The grumbling gradually fades as people get used to the coins, which really are just as convenient as the notes.

The same would work in the U.S. — people will accept the dollar coins as soon as the government stops printing dollar bills and they gradually disappear from circulation. Except that in the U.S., coins and notes are issued by separate government agencies. And the decision on what denominations get minted or printed is made by Congress, rather than a professional body like a central bank. People are used to dollar bills, so withdrawing dollar bills would be unpopular (just for a short while). Representatives and Senators don’t like being unpopular. So they keep wasting taxpayer money by printing all these short-lived dollar bills, and then waste more money by various schemes to introduce dollar coins, which simply won’t work until the dollar bills are gone.

Why does it bother me when I read elsewhere in reference to churning coins, “Order Early and Order Often”?

If there is a loophole why shouldn’t we exploit it? And yet I wonder do we have to exploit it to its fullest. Is it not more sensible to simply churn coins at a moderate rate rather than at thousands or tens of thousands of dollars at a time?

So does this mean I’m drawing a line? $5,000 in coin churning monthly is OK but not $7,500 or not twice monthly. But that makes little sense too.

@ Rochester Rich — That’s a fantastic question, and there’s simply no good answer. Ultimately we only have control over our own actions. So regardless of what you or I do, there will still be those that order $500/month, and those that order $50,000/month. We can simply do what’s in our best interest, because in the grand scheme of things we won’t directly change how long this deal exists.

It’s kind of like the whole question of mileage running when it comes to polluting the environment. Assuming the marginal fuel burn for another passenger is limited, are we really being that environmentally irresponsible? Yes and no. Chances are that if no one was mileage running capacity would be cut further in the long run, but if it’s just me not mileage running any longer, nothing will change.

The Government, or we the people, have a lot more to worry about than the mint absorbing postage and possibly transaction fees.

For instance, how many food stamp recipients, HUD recipients, Welfare Recipients also supplement their benefits with unreported income? A family of 5 can get close to $800 in food stamps in addition to HUD and a welfare check.

I, for one, think its about time that the “rest” of us extract a benefit from the shadows! But in the case of “coin churning”, its completely legitimate.

About Lucky

Ben Schlappig (aka Lucky) is a travel consultant, blogger, and avid points collector. He travels about 400,000 miles a year, primarily using miles and points to fund his first class experiences. He chronicles his adventures, along with industry news, here at One Mile At A Time.
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